Corporate loan 'signals confidence'<\/p>\n
JAKARTA (JP): The World Bank's private sector financing arm,
\nInternational Finance Corporation (IFC), and Deutsche
\nInvestitions und Entwicklungsellschaft (DEG) agreed on Thursday
\nto provide US$28 million worth of loans and equity capital to
\nIndonesian video cassette producer PT Megaplast Jayacitra.<\/p>\n
The loan and equity financing deals, seen by analysts as an
\ninitial sign of renewed confidence in Indonesia, are the first
\nforeign financing deal concluded by a local company after the
\noutbreak of the financial crisis in the country in July last
\nyear.<\/p>\n
\"We extend the loans and equity because we still believe in
\nthe long-term prospects of Indonesia's economy,\" said IFC's
\ndirector for South and Southeast Asia Rashad Kaldany after the
\nsigning of the financing agreements.<\/p>\n
IFC, a subsidiary of the Washington-based World Bank, agreed
\nto invest $14 million in Megaplast, consisting of an $11.5
\nmillion loan and $2.5 million in equity, or the equivalent of a
\n8.9 percent stake.<\/p>\n
While DEG, an investment development agency from Germany, will
\nalso provide an $11.5 million loan and invest $2.5 million in
\nequity.<\/p>\n
Managing director of Megaplast Jayacitra Jimmy Samantha said
\nthe eight-year loan would bear an interest rate of 2.5 percent
\nabove the three-month London Interbank Offered Rate (LIBOR).<\/p>\n
Megaplast Jayacitra, a newly established joint venture firm
\nbetween the Singapore-based MJC Singapore Pte. Ltd and CV
\nBelanico of Indonesia, is expected to start commercial production
\nlater this year, he said.<\/p>\n
\"We are now in the trial production process,\" Jimmy said.<\/p>\n
He said MJC and Belanic together owned 82.2 percent of
\nMegaplast, which would export the bulk of its production.<\/p>\n
Jimmy said the $56 million plant would produce 10 million
\nvideo cassettes annually starting in 2000.<\/p>\n
\"Our initial output will be two million cassettes in 1999,\" he
\nsaid.<\/p>\n
Kaldany said that although Indonesia was currently struggling
\nto get out of its worst crisis in decades, IFC did not see any
\nproblems with PT Megaplast because the company would export most
\nof its products.<\/p>\n
Kaldany added that the latest IFC loan to Megaplast would
\nfurther increase its investment portfolio in Indonesia, which had
\nreached $1 billion consisting of $150 million in equity and $850
\nmillion in loans to 42 companies.<\/p>\n
Of the total $850 million debt financing, IFC itself extended
\nonly about $350 million while the remaining $500 million was
\nprovided by other foreign banks as cofinanciers, he said.<\/p>\n
\"But between $100 million and $150 million of the IFC loans
\nare currently at risk of turning into bad credits because the
\ndebtors have difficulties in meeting their obligations amid the
\ncurrent economic crisis,\" Kaldany added.<\/p>\n
He said IFC had explored all possible options to recover the
\nloans extended to five Indonesian debt-ridden corporations.<\/p>\n
\"If we cannot reach an agreement on the loans, we may seek
\nto settle in the bankruptcy court,\" he said, while stressing that
\nbankruptcy proceedings would be a last resort.<\/p>\n
Kaldany declined to name the defaulting debtors, but said they
\nwere enterprises focused mainly on the domestic market, which was
\ndeeply depressed by the economic slump. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/corporate-loan-signals-confidence-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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